Economics & Pensions in Wisconsin

Dean Baker has a short piece in Politico that contains the most straight forward rebuttal to attacks on public workers from the right.

The reality that no honest person can dispute is that state budget crises are almost entirely due to the economic downturn, not out of control spending. This in turn was the result of Wall Street fraud and greed and the incredible incompetence of people like Alan Greenspan and Ben Bernanke, who failed to rein in the housing bubble before it grew to such dangerous levels.

However, politicians like Gov. Walker have managed to instead focus public anger on public sector employees who have the audacity to want to maintain a middle class life style. It would be great if the events in Wisconsin can be a turning point. If our economy was being managed by competent people we would have no problem assuring the whole population of the same sort of pension and health care benefits that most workers used to have and public employees still enjoy. We just have to stop handing over all of our money to Wall Street.

This is really the truth. There was a massive economic downturn in 2007-2008 which wrecked public pensions, along with all other pensions. Matt Stoller, on Twitter, points out, “Assets fell from $87.8B in 2007 to $61.8B in 2008. WI slashed benefits, raised costs.”

Even if you convinced me to ignore the Wall Street collapse as the primary cause for public pension troubles in Wisconsin, Brian Beutler points out that Gov. Scott Walker created this current budget crisis out of whole cloth to have an excuse to destroy public unions.

this broadside comes less than a month after the state’s fiscal bureau — the Wisconsin equivalent of the Congressional Budget Office — concluded that Wisconsin isn’t even in need of austerity measures, and could conclude the fiscal year with a surplus. In fact, they say that the current budget shortfall is a direct result of tax cut policies Walker enacted in his first days in office.

“Walker was not forced into a budget repair bill by circumstances beyond he control,” says Jack Norman, research director at the Institute for Wisconsin Future — a public interest think tank. “He wanted a budget repair bill and forced it by pushing through tax cuts… so he could rush through these other changes.”

Beutler links to an op-ed in Madison’s Capitol Times, which points out:

In its Jan. 31 memo to legislators on the condition of the state’s budget, the Fiscal Bureau determined that the state will end the year with a balance of $121.4 million.

To the extent that there is an imbalance — Walker claims there is a $137 million deficit — it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January.

To recap, the main issue with state budget and public pensions is due the Wall Street-caused economic collapse. And even withstanding that collapse, which Wisconsin largely survived without necessitating austerity measures, the only trouble exists now because Walker blew the budget with tax cuts for his pet projects which he is only now trying to pay for by breaking unions in Wisconsin.

One thought on “Economics & Pensions in Wisconsin

  1. This is a great video about the marches in Madison – really a great showing of the workers and their passion for justice and freedom! Scott Walker is looking to run down his opponents and this is not the right way! Hold Fast Wisconsin (Song ironically is called “Hold Fast” by Sons of the State with great footage:

    Feel free to pass along, I really thought it was moving…


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